Earlier this year, we posted that the Seventh Circuit Court of Appeals had ruled that the method by which the NCAA distributes Final Four tickets could constitute an unlawful lottery. This week, the Seventh Circuit vacated their previous opinion and certified three questions to the Indiana Supreme Court.
According to the complaint, each person who applied for tickets could submit an application with up to ten entries and a non-refundable handling fee. People who didn’t win tickets would give up the handling fees they had paid. (A more complete description of the process appears in our previous post.) Under Indiana law, an unlawful lottery consists of three elements: (1) prize; (2) chance; and (3) consideration. The Seventh Circuit held that the promotion was a lottery because plaintiffs allegedly paid a fee (consideration) to enter a random drawing (chance) in hopes of obtaining the tickets (a prize).
Following that decision, the NCAA filed a petition for rehearing arguing that the case involved issues of “exceptional importance” and that the decision conflicts with an Indiana Court of Appeals decision. Upon consideration of the NCAA’s petition, the Court of Appeals vacated its previous opinion and certified three questions for determination by the Indiana Supreme Court. How the Indiana Supreme Court answers the questions will determine whether the NCAA violated lottery laws. It could also determine whether other types of promotions that include fees are lawful.